Why High Implied Volatility Rank is Crucial to Options Trade Success

tastytrade looks at how a 1 Standard Deviation Strangle performs when IV Rank is high (50-74) and when IV Rank is very high (75-100). See latest tastytrade content: http://bit.ly/10VOWJ0 As premium sellers, we always want to take advantage of high Implied Volatility (IV). High IV allows us to collect a larger amount of premium as options are more expensive. Since we know this to be true, the higher the IV, the more credit that we can collect when we are selling the options. Today, Tom Sosnoff and Tony Battista look at how a 1 Standard Deviation Strangle performs when IV Rank is high (50-74) and when IV Rank is very high (75-100). The guys find out that while very high IV Rank is rare, when you do experience it, it is very beneficial. The study shows how the profit of each strategy is about the same even though there are half as many occurrences when IV Rank is above 75! When IV Rank does get to this level, it provides a great opportunity to sell premium! ======== tastytrade.com ======== Finally a financial network for traders, built by traders. Hosted by Tom Sosnoff and Tony Battista tastytrade is a real financial network with 8 hours of live programming five days a week during market hours. Tune in and learn how to trade options successfully and make the most of your investments! http://goo.gl/EaF69C Subscribe to our YouTube channel: http://goo.gl/Szl24S Watch tastytrade LIVE daily Monday-Friday 7am-3pmCT: http://goo.gl/EaF69C Download our mobile app, Bob the Trader: http://goo.gl/zgIyco Follow tastytrade on Twitter: https://twitter.com/tastytrade Become a fan of tastytrade on Facebook: https://www.facebook.com/tastytrade Follow tastytrade on LinkedIn: http://www.linkedin.com/company/tastytrade Follow tastytrade on Instagram: http://instagram.com/tastytrade Follow tastytrade on Pinterest: http://www.pinterest.com/tastytrade/

Comments

1. so much meaningful information nestled in so much meaningless chatter.
2. I’ve seen a lot of your videos regarding High IV rank and thus selling a 1SD strangle as the experiment. My question is why you sell 1 SD vs the 2SD strangle if you are managing winners at 50%? Tasty trade did a market measure where it showed that a 2SD option gets to the 50% profit area faster than the 1SD does, so i’m wondering why you wouldn’t sell the 2SD over the 1SD besides for the increase in premium received. The way I see it is, receive less premium selling the 2SD, and get an increased probability of winners, and the ability to take off the trade at 50% faster. Maybe my math is wrong, but wouldn’t you want a higher % of winners taken off faster than a 1SD strangle with a bit more premium but more % losers and a slower rate of getting to the 50% profit target?
3. Being a UK resident I cannot use the think-or-swim platform. Unlike most brokers, TD Ameritrade will not allow overseas investors to open an account with them. A TIN, or social security number is required. Colour me frustrated.
   
   Does anyone know where I can see IV rank listed elsewhere?